Crexendo Says It’s on Track for $100M Revenue as AI and Acquisitions Fuel Growth

Key Points

• Crexendo said it is on track for about $100 million in revenue and has now been GAAP profitable for 11 straight quarters, showing a major turnaround from its earlier loss-making years.
• The company’s growth is being driven by both its wholesale software platform and retail cloud communications businesses, with strong organic growth, very low churn, and the recent ESI acquisition expected to help lift its long-term revenue target toward $150 million to $200 million.
• AI is emerging as a new growth driver, especially Crexendo’s AI receptionist, which management says is selling quickly and could boost average customer revenue meaningfully while adding another monetization layer to the business.

Crexendo NASDAQ: CXDO President and Chief Operating Officer Doug Gaylor told investors at an LD Micro presentation that the cloud communications company is on track for sharply higher revenue and is continuing to grow profitably while pursuing acquisitions among its software licensee base.

Gaylor said Crexendo, which provides unified communications as a service and cloud-based telecom services, has changed substantially from when it first began presenting at LD Micro years ago. He said the company was previously a $10 million to $15 million business losing money, while this year it is “on track to do $100 million in revenue” and has been GAAP profitable for 11 consecutive quarters.

Wholesale and Retail Model

Gaylor described Crexendo as operating in two main segments: a wholesale software platform business and a retail cloud communications business. On the wholesale side, the company licenses its telecom software platform to other telecom providers, which can white-label the offering and sell it to their own customers. Gaylor said Crexendo is the third-largest software telecom platform provider in the country, behind Cisco’s BroadSoft platform and Metaswitch.

He said Crexendo is gaining customers from both larger competitors, citing limited investment by Cisco in BroadSoft and uncertainty around Metaswitch after Microsoft previously moved to end-of-life the product before selling it to Alianza. In the first quarter, Crexendo added five new software licensees, including two that moved from Metaswitch, following six Metaswitch conversions last year, Gaylor said.

The company currently has 245 licensees on its platform, according to Gaylor, who said the wholesale business generated 28% organic growth in 2025. He said churn in the segment is “almost negligible,” with average monthly churn of 0.1%. Existing licensees also continue to expand, with nine upgrade orders in the first quarter averaging about $600,000 each.

On the retail side, Crexendo sells directly to small and midsize businesses and competes with companies including RingCentral, 8x8 and Vonage, as well as legacy providers such as Avaya and Mitel. Gaylor said the retail division posted 15% organic growth in the first quarter, compared with low-single-digit growth among some larger competitors.

Financial Performance and ESI Acquisition

Gaylor said Crexendo generated $68 million in revenue in 2025, with 44% coming from the software side and 56% from the retail side. He said the mix will shift after the company’s March acquisition of ESI, one of its larger licensees, which had $26 million in revenue.

For the first quarter, Crexendo reported $20.7 million in revenue, including one month of contribution from ESI, representing 29% year-over-year growth, Gaylor said. Excluding the acquisition, organic growth was 15%. GAAP net income was $600,000, which Gaylor said included $800,000 of acquisition costs and $400,000 of intangible amortization costs. Non-GAAP net income was $3.3 million, and adjusted EBITDA was $3.2 million.

Gaylor said the ESI transaction was purchased for $35 million, consisting of roughly $27 million in cash and about $7.5 million in stock. He said Crexendo paid about 1.35 times revenue for a profitable and accretive business. ESI, based in Dallas, had been a Crexendo licensee for 14 years and had been in business for 38 years.

Gaylor said the acquisition strategy is central to Crexendo’s growth plan. He described the company’s 245 licensees as a “stock fishing pond” for future acquisitions and said several licensees contacted the company after the ESI announcement to express interest in potential future deals. He said Crexendo expects to use both organic growth and acquisitions to move from a roughly $100 million run rate to $150 million and eventually $200 million over the next several years.

Market Opportunity and International Growth

Gaylor said the broader market remains attractive because many U.S. businesses have not yet moved to cloud communications. He said about 60% of U.S. businesses are currently on the cloud, while 40% are still using older premise-based systems. He cited Gartner projections indicating that the percentage of businesses not on the cloud could fall to single digits over the next four years.

Internationally, Gaylor said Crexendo’s business grew 44% in the first quarter, although it represented only about 5% of the company’s business at the end of 2025. He said the company offers only its wholesale software platform internationally, not retail services. He also highlighted Crexendo’s relationship with Oracle Cloud Infrastructure, saying it allows the company to bring up instances in new markets quickly, including a recent opportunity in South Africa.

AI Products Add New Revenue Opportunity

Gaylor said artificial intelligence is becoming the next major driver in telecommunications. Crexendo has already been selling AI-related applications for more than a year, including tools for call recording, call summaries, sentiment analysis and contact center workflows.

The company introduced an AI receptionist product in January, which Gaylor said is “selling off the charts.” The product can answer calls, respond to frequently asked questions and schedule appointments. He gave the example of an air conditioning company in Phoenix using the tool to handle multiple incoming calls and schedule technicians automatically.

Gaylor said the company’s average retail customer pays about $340 to $350 per month, and the AI receptionist can add roughly $150 per month to an account, potentially increasing average revenue per account by about 40%. During the question-and-answer session, he said Crexendo has about 100 paying customers using the AI receptionist and is using a freemium model that allows customers to try the product free for 30 days.

Gaylor said the AI receptionist was developed by a third-party vendor through Crexendo’s ecosystem vendor program. He said the company has more than 45 vendors and developers building applications, including 12 working on AI applications. He said Crexendo’s cost for the AI receptionist is about $0.08 per minute, while it charges $0.25 per minute.

Balance Sheet and Outlook

Gaylor said Crexendo funded the ESI acquisition without borrowing and generated $2.5 million in free cash flow in the first quarter. He said the company had $7 million in cash on hand at the end of the quarter and recently closed on a $5 million term debt facility intended for future acquisitions.

When asked about the next 24 months, Gaylor said the company expects to pursue more acquisitions of licensees, ideally larger ones but potentially smaller deals as well. He said Crexendo’s average licensee is in the $10 million to $15 million revenue range and that the company intends to repeat the ESI model with accretive transactions.

Gaylor also noted that Crexendo’s stock had risen from about $6.50 to about $9.75 in the three weeks following its first-quarter results, saying investors were beginning to recognize the company’s growth and execution.

About Crexendo NASDAQ: CXDO

Crexendo, Inc NASDAQ: CXDO is a provider of cloud-based communications and collaboration solutions tailored to businesses of varying sizes. The company's flagship offering, CXsuite, integrates enterprise-grade voice, video conferencing, instant messaging, presence, and contact center functionality into a single platform delivered over the internet. By leveraging hosted infrastructure and a subscription-based model, Crexendo aims to reduce on-premises hardware costs and simplify management for IT teams and resellers.

Crexendo's product portfolio includes a multi-tenant cloud PBX, SIP trunking, session border controllers and an application programming interface (API) suite that allows partners and customers to embed real-time communications into custom workflows.

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